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Friday, October 30, 2009

The Welfare State Corrupts Absolutely

Let’s begin at the beginning. Medical care is not a free good found in nature. Of course, no one really thinks it is. But that doesn’t keep most people from wanting to pretend otherwise, and the current institutional setting makes that possible. After a while, one forgets one is pretending. Yet medical care goes on being a collection of produced goods and services — subject to the laws of supply and demand, and requiring resources and labor that come with opportunity costs. Therein lies the problem.

Medical insurance has come to mean getting something for free. The receiver of a service need not ask how it is financed. It’s just taken care of. (Passive voice intentional.) Yes, somebody gets paid, and the money comes from somewhere. That’s okay, as long as it doesn’t come from the covered party. (What would be the point of having insurance?) Don’t bother us with such matters. Let us believe it’s free. Let the insurer figure out the rest. But he’d better keep that coverage going. And don’t hassle us by not paying all bills eagerly and unquestioningly. That’s what he’s there for. Just reassure us that whatever services we consume will be taken care of. We don’t want to know the details. What’s that? The government is promising to cap our out-of-pocket expenses, require coverage for preexisting illness and free preventative care, and extend the same deal to absolutely everyone? And this will have no negative consequences whatever, such as limits on what we can buy or enlargement of the budget deficit or higher taxes for the middle class — but it will actually save money? Oh thank you, government!

This irresponsible mindset, which is similar to a not-very-inquisitive child’s, is what at least two generations of government intervention in health care — and the welfare state in general — have produced in the American people. Thus the welfare state retards moral and intellectual development. We expect the State — our surrogate parent — to make it all right. The demagogues we call politicians are happy to feed this attitude because it provides occasions for the expansion and exercise of raw power while seeming, like Santa Claus, to give away free goods. Of such things long political careers are made.

Something for Nothing

The healthcare “reform” juggernaut seems to be on an irresistible course. The 1,990-page (!) bill (pdf) released by the House leadership yesterday is just the latest variation on the corrupt something-for-nothing theme. The details obscure the big picture. A modest public option instead of a robust public option? Blah blah blah blah blah. The government-run insurance “alternative” was always more signal than substance. Why do you need a government “competitor” if the government will be dictating every detail of the private insurance business under any circumstances? What motivates the public option, I submit, is sheer hatred of private, for-profit business in the medical industry. Of course, we don’t have purely private, for-profit insurance companies — every state government runs a regulated, protectionist insurance cartel. (That’s why the feds exempted the insurance industry from antitrust; it was a favor to the state regulators.) But the public-option advocates would oppose truly free-market insurance companies. Their true preference is a government monopoly — which is why it is so funny to hear them praise “choice and competition.” That’s the last thing they want, but they know that the American people won’t accept their single-payer scheme. Anyone who really wanted choice and competition would at least support legalizing interstate insurance sales. The silence about that is deafening.

Most people get their insurance through their employer, so they won’t have the option of the public option anyway. One of the biggest sources of trouble in the healthcare system is employer-purchased insurance — it cuts the consumer out of decision-making. Yet this bill, and all the others, strengthen that perverse system. Some reform. Despite the squawking, the insurance companies love the idea of forcing people to buy their products. The corporate state thrives.

Like an uninquisitive child, most people seem willing to believe politicians when they promise to subsidize and compel the use of medical “insurance” while reducing prices without controlling choices. And while they’re at it, they’ll cut the budget deficit and boost economic growth. One shouldn’t have to be an economist to smell a scam. Exactly how is that supposed to work? They’ll get the money out of Medicare — without degrading the service — and they’ll tax millionaires, while fining employers who don’t provide insurance and those of us who don’t buy it. Since the American people aren’t rolling on the floor laughing their you-know-whats off, I can only conclude that the government’s schools have so dumbed them down that they have no trouble swallowing this patent nonsense.

A final word about the nearly 2,000-page bill. Others have said it, but it needs to be repeated. No one will be able to understand all the implications and consequences of a government attempt to design 15 percent of the U.S. economy. Heck, few will read — and grasp– the bill in its entirety. (You also have to read all the statutes that are amended by the bill.) Enacting laws that no one comprehends, and that turn over yet-to-be defined powers to others, wouldn’t seem to satisfy the criteria of self-government, the consent of the governed, the rule of law, or any of the other political myths we live by. I don’t how any theory of political obligation rooted in popular sovereignty that could regard this bill as morally binding when it becomes “law.” The process mocks the philosophy expressed in the Declaration of Independence. It insults the intelligence. It disgraces everything decent about this country.

Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.

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